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C8 Q15 You are considering making a movie. The movie is expected to cost $ 10.2 million up front and take a year to produce.

C8 Q15

You are considering making a movie. The movie is expected to cost $ 10.2 million up front and take a year to produce. After that, it is expected to make $4.2million in the year it is released and $1.7million for the following four years. What is the payback period of this investment? If you require a payback period of two years, will you make the movie? Does the movie have positive NPV if the cost of capital is 10.2%?

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